Essex Rental Corp. Annual Shareholder Meeting August 25, 2016

Transcription

1 Essex Rental Corp. Annual Shareholder Meeting August 25,

2 This document does not constitute an offer to sell or a solicitation of an offer to buy any securities. It is an outline of matters for discussion only. Some of the statements in this presentation and other written and oral statements made from time to time by Essex Rental Corp. ( the Company ) and its representatives are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements regarding the intent and belief or current expectations of the Company and its management team and may be identified by the use of words like "anticipate", "believe", "estimate", "expect", "intend", "may", "plan", "will", "should", "seek", the negative of these terms or other comparable terminology. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from the Company s expectations include, without limitation, the continued ability of the Company to successfully execute its business plan, the possibility of a change in demand for the products and services that the Company provides, intense competition which may require us to lower prices or offer more favorable terms of sale, our reliance on third party suppliers, our indebtedness which could limit our operational and financial flexibility, global economic factors including interest rates, general economic conditions, geopolitical events and regulatory changes, our dependence on our management team and key personnel, as well as other relevant risks detailed on our website, The factors listed here are not exhaustive. Many of these uncertainties and risks are difficult to predict and beyond management s control. Forwardlooking statements are not guarantees of future performance, results or events. The Company assumes no obligation to update or supplement forward-looking information in this presentation whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results or financial conditions, or otherwise. This presentation contains unaudited non-gaap financial measures, including pro forma results. Management believes that the presentation of these non-gaap financial measures serves to enhance understanding of the Company s individual operating and financial performance. These non-gaap financial measures should be considered in addition to, but not as substitutes for, the most directly comparable U.S. GAAP measures. We believe the non-company information provided herein is reliable, as of the date hereof, but do not warrant its accuracy or completeness. In preparing these materials, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources. Except as required by law, the Company and its directors, officers, employees, agents and consultants make no representation or warranty as to the accuracy or completeness of the non-company information contained in this document, and take no responsibility under any circumstances for any loss or damage suffered as a result of any omission, inadequacy, or inaccuracy in this document. The Company does not guaranty the performance or return of capital from investments Essex Rental Corp. 2

3 Company Overview 3

4 Essex Rental Corp. Anticipated divestiture of Essex Crane Rental Corp. subsidiary proceeding. Company expected to primarily operate through Coast Crane subsidiary moving forward. Will remain one of the leading national rental equipment companies with a fleet consisting primarily of heavy lift cranes including rough terrain cranes, tower cranes, and crawler cranes. Fleet portfolio also includes boom trucks, industrial cranes, and elevator lifts, which are used in a variety of construction applications. Coast Crane Company ranked #4 in the 2016 ACT Tower Crane 50 and one of only five companies in the list to have more than 100 tower cranes in their fleet. Focused on bare rental of construction and lifting equipment with approximately 300 units. 4

5 Management Team Name, Position Yrs. Of Experience Background Nick Matthews, 21 u Appointed President and Chief Executive Officer in March 2014 President & Chief Executive Officer u Previously served as Chief Operating Officer for Essex Rental Corp. u Prior to joining the Company, Mr. Matthews served as Vice President and Group Executive for Railcar Operations at GATX Kory Glen, CPA, 17 u Appointed Chief Financial Officer of Essex Rental Corp. in 2013 Chief Financial Officer u Prior to joining the Company in 2009, Mr. Glen served as Director of Financial Reporting of Equity Residential, a publicly traded real estate investment trust 5

6 National Footprint Highly diversified end markets primarily located along the West Coast and Pacific Northwest. Markets served include: Power Generation Water Treatment & Purification Industrial Plants Petro Chemicals Bridges/Highway Commercial/Residential Construction Refineries Shipbuilding/Offshore Oil Fabrication Fabrication 6

7 Coast Crane Company End Markets 2015 Petrochemicals Petrochemical, (15%) $3.4, 15% Transportation, Transportation $1.4, 6% (6%) Chemical Plants Petrochemical Plants Road construction Bridge construction General Building, General Building $11.6, (52%) Industrial Industrial / Marine / Marine, (9%) $2.0, 9% Stadiums High-rises Industrial Facilities Factories Power (9%) Power, $2.0, 9% Sewer & Water (4%) Transmission Lines Wind Power Other, $1.2 Other, (5%) Sewer & Water, $0.7, 4% 7 Sewers Water Treatment

8 Coast Crane Rental Fleet Rough Terrain Cranes Tower Cranes Boom Trucks Crawler Cranes Sales Channel Rental & Distribution Rental & Distribution Rental & Distribution Rental & Distribution Avg. Life (years) Wtd. Avg. Age (1) 5.4 years 8.6 Years 6.9 Years 3.3 Years Dollar ($) Utilization (2) 19.0% 23.1% 25.5% 9.9% Original Equipment Cost ("OEC") (3) $44.1m $37.0m $13.3m $7.4m % of Total OEC (3) 43% 37% 13% 7% Max Capacity (tons) Max Reach Cap. (ft.) Price New ($'000) $250 - $1,500 $300 - $1,000 $100 - $600 $800 - $2,500 Rental Duration Short- medium term Long- term Short- term Long- term Key End Markets Transportation, Public Infrastructure, Power Generation, Sewer/ Water Treatment, Petrochemicals, Industrial/ Marine, Commercial & Residential Nuclear power, Sewer/ Water Treatment, High rise (>10 Story), Office Towers, Condominiums, Apartment Buildings Petrochemical, Railroads, Highways, Public Utilities, Condominiums, Apartment Buildings, Other Residential Highways, Large Bridges, Railroads, Public Infrastructure (Stadiums, Garages), Power Generation, Sewer/ Water Treatment, Petrochemicals, Industrial/ Marine Manufacturers Broderson, Manitowoc, Sany, Tadano, Terex Comansa, Potain Manitex, Manitowoc, Tadano Manitowoc, Tadano (Mantis) % of Total Rental Revenue (2) 40% 40% 16% 4% (1) Calculated based on weighted average orderly liquidation value; as of June 30, (2) LTM utilization and rental revenue as of June 30, (3) Original Equipment Cost includes accessories as of June 30,

9 Business Strategy The Company s three pronged strategy provides multi-faceted offering to service over 2,000 customers various equipment needs: Rental Equipment Keen focus on return on capital equipment with medium to long duration rentals Leverage customer relationships by offering bundled equipment solutions to drive increased utilization Organic growth through increasing fleet size Emphasize a rent-to-sell business model Equipment Distribution Provides countercyclical balance to rental business segment Strong relationships with each of the top crane manufacturers Continue to evolve into a broad line dealer by providing exceptional service and support Leverage rental equipment customer relationships Parts & Service Support Predictable, high margin, counter cycle Proactively market our expertise to drive growth Not capital intensive Provide opportunity to differentiate offering and engage customers for a future rental or sale. 9

10 Return on Capital vs. Return of Capital Essex Rental Fleet Employs Long Lived Assets Asset Depreciation (1) Benchmark: Annual Depreciation % (2) Asset Depreciation (1) Benchmark: Residual Value vs. Lifespan 0% -5% -10% -15% -20% -25% 90% Hospital Equipment Roller Excavator Scissor Lift Van Trailers Tractor Loader Skidsteer Loader Forklift / Boomlift crane Backhoe Boom Truck All terrain cranes Rough Terrain Scotsman rental equip. (Europe) Mobile Mini storage units (wood) Scotsman rental equip. (N.America) Tower Crane Mobile Mini storage units (steel) -3% -3% -3% -2% -6% -5% -7% -7% -11% -11% -11% -11% -10% -12% -14% -14% Essex Crane Crawler Crane -1% Notes: 1. Asset depreciation represents equipment market value depreciation 2. Annual Depreciation % = (1 Residual Value %) / Lifespan. *Source: Oliver Wyman Essex Crane Assessment and the Company -22% 80% 70% 60% 50% 40% 30% 20% 10% 0% Tractor Loader Roller Skidsteer Loader Forklift Crane Backhoe Excavator Boom Lift Scissor Lift Van trailers Hospital equipment Scotsman rental equipment (North Mobile Mini storage units America) Mobile Mini storage units (wood) (steel) Boom Truck All terrain cranes Rough Terrain Crane Rental Lifespan (years) Scotsman rental equipment (Europe) Crawler Crane Tower Crane Denotes classes of equipment owned by Essex Rental 10

11 Utilization Statistics Dollar Utilization Three Months Ended* Year Ended June 30, 2016 March 31, 2016 June 30, 2015 December 31, 2015 Rough Terrain Cranes 17.1% 17.7% 20.8% 20.5% Tower Cranes 19.7% 22.8% 17.8% 21.3% Boom Trucks 20.8% 19.7% 29.7% 29.7% Crawler Cranes 6.8% 5.9% 12.5% 12.7% * Dollar ($) Utilization represents rental revenues annualized divided by the average original equipment cost. 11

12 Summary Financial Information Revenues ($ in millions) Total Debt & Fleet OEC ($ in millions) $70.0 $74.0 $140.0 $60.0 $17.6 $18.6 $14.8 $16.2 $15.2 $72.0 $130.0 $50.0 $14.7 $70.0 $68.0 $106.5 $104.5 $105.6 $119.6 $114.8 $115.2 $120.0 $110.0 $40.0 $66.0 $100.0 $30.0 $18.9 $16.7 $20.1 $19.2 $16.2 $10.7 $64.0 $72.1 $72.3 $90.0 $20.0 $10.0 $19.8 $23.4 $22.1 $23.6 $25.4 $24.7 $62.0 $60.0 $58.0 $67.5 $62.4 $65.0 $62.4 $80.0 $70.0 $60.0 $ TTM 6/30/16 $ Jun 2016 $50.0 Rental Segment Revenue Eq. Distribution Segment Revenue Parts & Service Segment Revenue Total Debt Fleet OEC Note: Divestiture of Aerial Work Platform assets from rental fleet contributed approximately $4.8 million and $0.3 million of rental equipment sales in 2012 and 2013, respectively. Note: Fleet OEC includes rental equipment, retail equipment inventory and property, plant & equipment 12

13 Market Indicators 13

14 Market Indicators Architecture Billing Index ( ABI ) - National 14

15 Market Indicators Architecture Billing Index ( ABI ) West Region 15

16 Future Focus 16

17 Current Business Initiatives Improving utilization and return on invested capital Strategic partnerships Explore additional offerings & services Strategically position fleet for optimal utilization Improving quality Enhance each segment Rental, Parts & Service and Equipment Distribution Create a culture of continuous improvement Coast Crane Company refinancing Continued focus on reducing leverage Secure credit agreement with competitive rates to allow for growth Oil & gas end market softness has impacted equipment collateral values and is creating some headwinds Strong results and reduced leverage helping to offset negative impact to equipment values Position Essex Rental Corp. for future Structure company to maintain efficient operations and back office functions to remain profitable in near term Focus on organic growth and unlocking equity value to increase shareholder value 17

18 Growth Opportunities - Organic Market Tailwinds ERC Opportunities / Actions The recent FAST Act calls for over $300 billion on transportation infrastructure spend, of which $14 billion is projected to pass through to the construction equipment market The AIA Architecture Billings Index (ABI) suggests that architecture billings, both nationally and in the West region reflect continued improvement in end markets Rebounding construction market positively impacts crane demand Heavy equipment rental industry continues to grow annually Expand footprint, branch / regional expansion Drive parts and service Demonstrated ability to identify and execute strategic initiatives Incremental fleet investment to generate attractive returns Substantial capacity and infrastructure to support growth Strong customer relationships with current customer base, focus on expanding reach Increasing social networking visibility 18

19 Investment Highlights Integrated Business Model Rental New and Used Sales Parts and Service Multi faceted offering of diverse lifting needs Multiple lines of business driving growth Cyclical earnings smoothing Geographic & End Market Diversity 11 locations on West Coast, Gulf region and Canada Serve a broad array of end markets, with no exposure to a single industry Significant Asset Value Total fleet original equipment cost ( OEC ) of $115.2 million as of 6/30/2016 Includes $101.8 million OEC of rental fleet as of 6/30/2016 Return on Capital Business Model Focus on long economic lived assets High residual value relative to original cost Young fleet in early phase of economic lives Attractive ROIC business model due to efficient conversion of EBITDA to free cash flow 3 Primary Growth Drivers Rental equipment New and used equipment sales Parts and services support 19